Question
A firm is evaluating a 5-year project with annual cash inflows of $220,000 and cash outflows of $165,000. The initial investment of the project is
A firm is evaluating a 5-year project with annual cash inflows of $220,000 and cash outflows of $165,000. The initial investment of the project is $220,000.
a) Calculate the undiscounted payback period of the investment.
b) Given the cost of capital for the firm is 8%, calculate the net present value (NPV) for the investment. Should the company invest in this project based on NPV answers? Explain your reason(s).
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Advanced Accounting
Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik
10th edition
0-07-794127-6, 978-0-07-79412, 978-0077431808
